1

3. REVIEW OF LITERATURE: HIGH TECHNOLOGY PRODUCTS AND INTERNATIONAL MARKETING In chapter 2 the theoretical foundation of this research was laid out. In chapter 3 the effect of high-technology products and international marketing on the various elements of the theoretical foundation will be dealt with in detail. After this review it is possible to describe the empirical methodology of the research. Chapter 3 will have an especially important meaning for the model description of the research process and additionally for the presentation of the research questions and hypotheses.

3.1.

The marketing concept

As briefly discussed in chapter 1.2., the supply side of marketing says that supply is the factor that determines what products are to be produced. This is presumed to be suitable especially for high technology companies. Why is it so important to speak about supply-side marketing? By producing high technology products, it is possible to create real advances in the marketplace. For technological innovation, markets must be created, not surveyed.1 The theory of supply-side marketing says that surveys trying to determine demand before the new product development is basically unnecessary. 2 It was also concluded by Ajay K. Kohli and Bernard J. Jaworski in their excellent study concerning market orientation that "The greater the technological turbulence, the weaker the relationship between market orientation and business performance". The proposition is not that a market orientation is unimportant, but rather that it is less important. 3 Another view has been brought up by Bruce D. Buskirk et al.4 They claim that "High technology is the innovative application of technology to the solution of marketplace problems". The role of marketing varies depending upon the stage of technology as illustrated in the following figure. 1

William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 41.

2

Larry Reynolds O'Neal: An Empirical Investigation of the Role of the Marketing in the New Product Design, p. 6.

3

Ajay K. Kohli and Bernard J. Jaworski: Market Orientation: The Construct, Research Propositions and Managerial Implications, p.14. See also John C. Narver, Stanley F. Slater: The Effect of a Market Orientation on Business Profitability.

4

Bruce D. Buskirk: Planning Market Development in High-tech Firms, p.2. See also Robert G. Cooper: New Products: What distinguishes the Winners. Research and Technology Management. (33), No. 6, November- December 1990, p. 27-31.

2 Buskirk et al. say that a business competing with high-technology strategy succeeds by combining its technical expertise, its ability quickly to gain knowledge about its customers' problems and needs, and its ability to give the customer sufficient technological expertise to evaluate and choose product. Regis McKenna emphasises that there is need to draw a distinction between marketing-driven and market-driven approaches. They are in his opinion very different from each other. Marketing-driven approaches are based on advertising and promotion, while market-driven approaches are based on developing strong products, understanding the structure of the market, and building relationships with other people and companies in the marketplace. 5 The building of relationships was also mentioned in Kotler's definition in chapter 2.1.6

Relative effort allocation

100% firms engineering and marketing efforts

Marketing efforts

Engineering efforts

Cutting State of Advanedge the art ced

Mainstream

Mature

Decline

STAGE OF TECHNOLOGY Figure 16.

Marketing-engineering balance in various types of technology products. 7

5

Regis McKenna: The Regis Touch, p.26.

6

See Philip Kotler: Marketing Management: Analysis , Planning and Control, p.9.

7

Bruce D. Buskirk: Industrial Market Behaviour and the Technological Life Cycle, p.9.

3 As indicated by Nyström, in the traditional economic and marketing theory, buyerseller relationships are mainly viewed as a direct function of competitive mechanism. Buyers are assumed to react to and be passive users and consumers of what is offered on the market place, rather than interact with producers to develop new and better products.8 This is in Nyström's view a relatively static view and thus there is no need for innovations to create and handle radical change. Further Nyström wants to emphasise and extent the relationship between the buyer and the seller to a dynamic interaction and the knowledge development. Dynamic management of marketing relationships in the high technology context is to be viewed as a creative learning process, based on the interaction between the buyers and sellers. It is the view of the researcher based on the previous discussion, that the marketing concept should be included into the framework of the study. It should, however, be modified and the concepts of relationship marketing should be taken into account. It is thus possible to measure the effect of organisational structure on the marketing effort.

3.2. Marketing methods 3.2.1. Product Zangwill proposes an interesting extension to the marketing method concerning the introduction of new high-technology products. He introduces the concept of "rapidcycle" learning. This is described in the following figure.9

8

Harry Nyström: Technological and Market Innovation, p.159.

9

Willard I. Zangwill: Lightning strategies for Innovation, p.180-183.

4

Slow-learning cycle

Sales-customer feedback

Develop product Rapid-learning cycle

Develop product

Figure 17.

Salescustomer feedback

Salescustomer feedback

Launch improved Product

Salescustomer feedback

Launch improved Product

Launch improved Product

Launch improved Product

Slow-learning cycle and rapid-learning cycle in the launch-process of new high-technology products.

The flexibility that the rapid-learning cycle involves, is essential in the launch process of new-high-technology products.10 The idea in the rapid-learning cycle is following. The company throws a new product into the marketplace. Based on the feedback, the company learns and then revises the product. According to Zangwill, rapid-cycle learning produces faster learning, as the following figure indicates.11

10

See for example Willard I. Zangwill: Lightning strategies for Innovation, p.180 and Regis McKenna: The Regis Touch, p.48.

11

Willard I. Zangwill: Lightning strategies for Innovation, p.182.

5

Rapid-cycle learning

Slow-cycle learning

Figure 18.

Learning in rapid-cycle and slow-learning cycles.

The major product strategies, as far as entering foreign markets based on Zirkle's extensive literature review, are the following: 12 - domestic product line extension - product adaptation - standardised or global product. In the domestic product line extension strategy the company takes standard domestic product into the foreign markets without making literally any changes. This strategy is according to Zirkle a low-cost, low-investment and a low-risk plan chosen by the novice or smaller firm entering into the international trade for the first time. The second major product strategy is product adaptation. It demands the product to match each foreign market the firm is entering. This strategy may require relatively minor changes or major changes depending upon the type of product and/or market to be entered. 12

Edward J. Zirkle: The Role of Marketing in New-Consumer-Product Development for Foreign Markets, p. 31-33.

6 The third strategy is standardised or global product strategy. It requires products to be developed to meet the needs of a significant group of international markets or possibly an entire group of countries, or even all markets world-wide. The decision whether to standardise or adapt, can mean the difference between success and failure. This has been discussed in literature quite extensively. Kacker13 for example speaks about fundamental product adaptation and minor adaptation to characterise efforts made by a company to modify its products to meet the needs of a foreign market. Terpstra14 found out in his study that the consumer products enjoyed normally a much greater penetration in the Common Market if modified according to the market needs. Also in the case of industrial products, he found that adaptation was necessary because of national regulation or other specific requirements. Cooper15, on the other hand, states that in the case of export strategy, product strategy translates into product adaptation policy, or the degree to which a firm adapts its products to foreign markets: at the one extreme, the firm simply sells its domestic product abroad with minimum adaptation; at the other extreme, the firm develops products specifically for its export markets. The results of Cooper's study were quite clear. Designing products specifically to suit target export market segments is an appropriate strategy. This finding is also supported by Ryans. 16 His research findings are presented in the following figure.

13

Madhav. P. Kacker: Export-Oriented Product Adaptation - It's Patterns and Problems, p.63.

14

Vern Terpstra: American Marketing in the Common Markets, p.43.

15

Robert G. Cooper, Elko J. Kleinschmidt: The Impact of Export Strategy on Export Sales Performance, p.39.

16

Adrian B. Ryans: Strategic Market Entry Factors and Market Share Achievement in Japan, p.404.

7

Market share achieved in Japan 40

30

20

10

0 Introductory

Growth

Product not Modified Figure 19.

Mature

Decline Product Modified

Predicted effect of product life cycle stage and product modification on market share achievement.

Ryans' findings are quite clear. Product adaptations to the needs and wants of the various export markets are beneficial for the company. Product adaptations clearly lead to much better market share than if adaptation is not done. This is the case in every phase of the product life cycle, but especially this seems to happen in the introduction phase of the product life cycle. It has to be remembered that adaptation involves costs. In the words of Kacker " The often-repeated exhortation that in international marketing a company should always adapt its

8 products, advertising and promotion is clearly superficial, for it does not take into account the cost of adjusting or adapting products and communications programs". In his view the costs develop as presented in the next figure.17

0

2

4

6

8

10

12

14

16

18

Number of product changes Zone of minimal product













adaptation

Figure 20.

Zone of voluntary product adaptation (minor type)

Zone of vol product ad (major typ

Typical effects of product adaptation on costs of production and export selling.

The last major product strategy was standardised or global product. Levitt18 says that the core of a global strategy lies in developing a standardised product to be produced and sold in the same way everywhere.19 It was found out by Alahuhta 17

Madhav. P. Kacker: Export-Oriented Product Adaptation - It's Patterns and Problems, p.66.

18

Theodore Levitt: The Globalization of Markets, p.92-102.

19

See a much broader discussion about this issue in Matti Alahuhta: Global Growth Strategies for High Technology Challengers, p. 42-43.

9 that a global product was a key factor for the success of high technology challengers' strategy.20 Thus it is clear for the researcher that the marketing method "product" has to be included into the study. It plays a major role when exporting into the foreign markets. Additionally, minor or to certain extent major product modifications are necessary, if success is to be expected. In the case of a global achievement, global product seems to be important, at least in the case of high technology challengers. Also it seems to be quite important to take advantage of the so-called rapid cycle learning. 3.2.2. Pricing Price is an important element of the marketing mix which directly affects the attractiveness of the product offered for sale in the export market.21 The importance of price as a choice criterion differs from organisation to organisation.22 Like all goods and services, also new high-technology products should be priced according to its value in the marketplace. 23 On the basis of the research findings, there seems to be no special pricing items to be taken into account, when speaking about the launch of new high-technology products into the foreign markets. The research in this area seems to be almost non-existent.24 Pricing is, however, an important element in marketing and should thus be included as a marketing method in this research. Based on the limited findings in other research, it is feasible to say that emphasis should be put on the determination of the value of the technology to the customer.

3.2.3. Distribution

20

Matti Alahuhta: Global Growth Strategies for High Technology Challengers, p. 69.

21

Sage Ann D'Quila Scheer: Effective Marketing Methods in Export Management Companies, p.76.

22

J. Patrick Kelley, James W. Coaker: The Importance of Price as a Choice Criterion for Industrial Purchasing Decisions, p. 281-293.

23

Noel Capon, Rashi Glazer: Marketing and Technology: A Strategic Coalignment, p.7.

24

Noel Capon and Rashi Glazer have presented questions in their study for identifying the "value" of technology. These questions form a good basis for the determination of price. The emphasis here seems to be in the evaluation of the value of the technology to the customer.

10 The distribution concept is one of when and how to get the product to the market in an acceptable and efficient manner.25 In the normal product marketing, there is a stockpile of the commodity from which a measurable amount can be delivered at a specified time and place. According to Rashi and Clazer, this is not perhaps applicable to technology.26 Distribution of technology is analogous to information flow within a communication channel. They claim that "to protect the value of the asset being communicated, technology channels are likely to be rather short. Key distribution problems are field-of-use restrictions - market segment decisions based on geography, end-use application, and other segmentation variables - and licensee decisions". Again, the researcher decided to include also this marketing method in this study in order to measure the extent to which distribution is used as a marketing method and how efficient it is perceived to be. 3.2.4. Promotion As indicated earlier, the four main elements of promotion are personal selling, advertising, publicity and sales promotion. As mentioned by Shanklin and Ryans, the largest number of marketing personnel in high-technology companies is involved in personal selling and sales promotion efforts. 27 As far as personal selling is concerned, the industrial salesperson has been virtually ignored as an integral part of the marketing mix. Many studies of buying practices in industry have shown that personal selling is 2 to 3 times more accepted by industrial customers than any other marketing method.28 It has been also stressed that the salesperson of high-technology products needs to have technical training.29 A further point to this, however, is that many technology-based companies try to sell their products based on quantitative specifications. McKenna emphasises a qualitative approach in sales, since many customers make their decisions on more qualitative 25

Sage Ann D'Quila Scheer: Effective Marketing Methods in Export Management Companies, p.77.

26

Noel Capon, Rashi Glazer: Marketing and Technology: A Strategic Coalignment, p.7.

27

William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 90.

28

George Miaoulis, Peter J. LaPlaca: A Systems Approach for Developing High Technology Products, p.259.

29

William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 94.

11 factors, such as service, reliability and reputation. 30 Personal selling is thus included in the research. In the traditional approach in marketing, especially in the consumer side, advertising and promotion are important marketing methods. In the high technology industries they are only in the supportive role. By putting resources in advertising, one can only reinforce positions in the market place, but creation of positions is not possible. Advertising, therefore, should be one of the last parts of a marketing strategy, not the first in marketing high-technology products. 31 As far as exporting is concerned, it has been stated that it is a rare exporter who does not use advertising of some type, even if it is no more than being listed in an export directory.32 The media used in marketing of high-technology products is perhaps different from in other products. The emphasis seems to be in trade journal and magazines and direct mail.33 Advertising is, inspite of its perhaps a lesser meaning as a marketing method, also included in the research. Publicity is one of the means of promotion. The lesser meaning of publicity has been already stated. The problem in the marketing of high-technology products could be the possible overstatements in publicity. By having publicity as a very important marketing method, too optimistic expectations can built. Thus publicity could, if not properly done, even be counterproductive.34 It is important to know, however, to which extent publicity has been used by the high-technology companies when launching new products into the foreign markets and thus publicity was included into this study as a marketing method. As defined by Sage Ann D'Quila Scheer in her dissertation, sales promotion is singled out as a separate marketing method to refer to trade shows and the development of printed material designed to enhance the personal selling 30

Regis McKenna: The Regis Touch, p. 29.

31

Regis McKenna: The Regis Touch, p. 25 and 55. See also William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 209-213.

32

Sage Ann D'Quila Scheer: Effective Marketing Methods in Export Management Companies, p.79.

33

William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 206.

34

William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 10.

12 technique.35 Quite a few companies use trade shows as an important marketing method in for example bio-technology business.36 It is dangerous, however, to emphasise too much technical specifications in the brochures. McKenna speaks about "specsmanship" marketing to indicate a sure sign of a commodity mentality.37 Instead customer benefits and solutions to their problems should be stressed. Sales promotion is also included into this research.

3.3. Marketing organisation The integration of various business departments seems to be a critical success factor in developing new high-technology products. 38 Also there seems to be some differences as far as the location of new product development activities is concerned according to the type of the new product.39 This figure, however, only indicates how the new product development process is to be organised. What is the role of marketing in each organisational arrangement supposed to be, is not clear, however. 40 Thus marketing organisation as a marketing method is included into the research.

35

Sage Ann D'Quila Scheer: Effective Marketing Methods in Export Management Companies, p.81.

36

William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 206.

37

Regis McKenna: The Regis Touch, p. 139.

38

See for example Ashok K. Gupta, S.P. Raj, David L. Wilemon: R&D and Marketing Dialogue in High-tech Firms, Rudy K. Moenart, William E. Souder: An Information Transfer Model for Integrating Marketing and R&D Personnel in New Product Development Projects and John Pinckney Workman, Jr.: Racing to Market: An Ethnogaphy of New Product Development in the Computer Industry.

39

Booz, Allen & Hamilton: New Products Management for the 1980s: Phase I, p.9.

40

See also Ashok K. Gupta, David L. Wilemon: Accelerating the Development of TechnologyBased New Products, p. 26.

13

New Product Managers General Manager With Specialized Skills

Types of New Products Totally New Products

General Manager With Broad Background Product Manager with Strong Marketing Background

Brand Proliferations or Repositionings Marketing

Figure 21.

Marketing, R&D or Engineering

New Product Department

Venture Team

Organisation housing for new products responsibilities by Booz, Allen & Hamilton.

Same applies to the use of marketing consultants. Many high-technology companies use them since they can provide such services not usually readily available in hightechnology companies. Therefore the use of marketing consultants as a marketing method is included into this research.41

3.4. Marketing strategy and planning There is first the issue of market shares. In the traditional approach of marketing, the market share has received a lot of attention. According to the PIMS studies, there is a direct relationship between the market share and the profitability of the company.42 According to the PIMS theory, if the absolute market share of the company falls below 10 %, that will almost automatically lead to unsatisfactory profit results. The problem with this approach is the fact that most emerging high technology industries are very small. Thus a company can draw wrong conclusions, when looking the total size of the industry and the market share from this market. This is the trap many large companies have fallen, for example IBM when it was studying 41

See for example Regis McKenna: The Regis Touch, p. 3-5.

42

See for example Philip Kotler: Marketing Management: Analysis, Planning and Control, p.391.

14 the possibility to enter personal computer business in its early days. Thus companies should focus on creating markets, instead of putting emphasis on market shares. 43 For these reasons, it was decided by the researcher, that it is important to find out how the issue of market shares is dealt with in high-technology companies. Is market share an essential guiding tool for the marketing decisions or not? Therefore the use of market share as a marketing tool is included into this research.

P r o f i t a b i l i t y Figure 22.

% 30 20 10 Under 10 10-20 20-30 30-40 Over 40 %

Market share

The correlation of market share and profitability according to PIMS.

Cooper found out in his study that there are five different strategic alternatives that companies could use in their new product programs.44 They are following: - technologically driven, - balanced focused, - technologically deficient - low-budget conservative - high-budget diverse The technologically driven strategy is based on technological sophistication, orientation and innovativeness, but lacks a marketing orientation and product fit and focus. New products end up in unattractive low synergy markets. In Cooper's study 26.2 % of firms fell into this group.

43

Regis McKenna: The Regis Touch, p. 21.

44

Robert G. Cooper: Overall Corporate Strategies for New Product Programs.

15 In balanced, focused strategy there is a balance between technological sophistication, orientation and a strong market orientation. The program was highly focused, and new markets were targeted at very attractive markets. In Cooper's study 15.6 % of firms fell into this group. Technologically deficient strategy was described as a non-strategy by Cooper. This strategy is technologically weak, with low technological synergy, yet involved new markets and new market needs with superior products. This strategy is a defensive and focused strategy as well. In Cooper's study 15.6 % of firms fell into this group. Low-budget, conservative strategy assumes a low level of R&D spending, and "me too" products and "stay-close-to-home" -approach. It also means high technological synergy, high marketing synergy and high product fit and focus. It is described a safe, efficient but undramatic program by Cooper. High-budget, diverse strategy means high level of R&D spending but is in the same time poorly targeted. It means new highly competitive markets for the firm without program focus. It is called a "shotgun" approach by Cooper. Without a doubt, the choice of the strategy is closely linked to the performance of a firm's new product program. The most profitable strategy was the balanced focused strategy. The researcher has an interest to find out is this approach used also in the object group of this study. 3.4.1. Market segmentation The use of market segmentation as a marketing method in the high-technology field has been stressed in the literature.45 The high-technology company should target its product at a specific audience. The advantages of market segmentation are clear. It reduces the competition and improves the possibilities to satisfy the needs of the customers to larger extent than without segmentation. According to McKenna deciding to which customers to sell requires creative segmentation of the market.46 Segmenting the market involves sometimes the so-called adaptation sequence. This 45

See for example William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 67, 142 and 152-155, and Regis McKenna: The Regis Touch, p. 38 and 45.

46

Regis McKenna: The Regis Touch, p. 78.

16 relates closely to the widely studied item of the diffusion of technology. 47 This phenomenon is presented in the following figure.

% of market

Time Figure 23.

The diffusion of technology.

The studies in the area of social science have showed that people fit into four categories according to how they adopt new products. This is described in the following figure.

Late Majority

Early Majority

Early adopters Innovators

Laggards TIME

Figure 24.

The diffusion process from the behavioural point of view.

These groupings can be used as a basis of segmentation. Especially in the case of new high-technology products this basis of segmentation has been found very useful.48 47

A good description of the diffusion of technology can be found in Hannu Jaakkola's dissertation. See Hannu Jaakkola: Analyysi tietotekniikan soveltamisesta Suomen teollisuudessa, p.55-92.

48

William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 166. The concept of lead user has been developed by Eric von Hippel for new product development in fields subject to rapid change. See Von Hippel , E.: "Lead Users: A Source of Novel Product

17 The other issue here the concept of "lead markets". Alahuhta found that it is especially important for high-technology challengers to establish themselves into the lead markets early in order to establish a strong position in the world markets. 49 This is in actual fact also a basis for segmentation of the markets. For these reasons, market segmentation was also included into this study. 3.4.2. Market positioning Market positioning has been identified in the literature as one the perhaps most import marketing methods in the marketing of high technology products. In the words of McKenna: "Indeed, at the heart of every good marketing strategy is a good positioning strategy".50 Or in the words of Shanklin: "No marketing activity is more significant than the delineation of the priority prospects for each product, process or service of the corporation".51 The conceptual foundation of international positioning is that products can be viewed as different collections of attributes that can provide benefits to the customers.52 When a high-technology company is targeting specific foreign market segments, it tries to develop such product attributes that give benefits corresponding the needs and wants of the target segment.53 Concepts," Management Science, 32, 1986, p.791-805. According to Von Hippel it is important for marketing research to understand user needs for potential new products. This is essential to the new product development process. Users can contribute based on Von Hippel's findings a lot more to the inquiring researcher than pure data concerning their unfilled needs. The productivity of the product development process can be improved dramatically by using "lead users" as a source of need and solution data. 49

Matti Alahuhta: Global Growth Strategies for High-Technology Challengers, p.45-47.

50

Regis McKenna: The Regis Touch, p. 13.

51

William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 141.

52

Sage Ann D'Quila Scheer: Effective Marketing Methods in Export Management Companies, p.82.

53

Albaum et al. have stated as follows: Whether a company is efficient in positioning a export product where it wants depends heavily upon the extent to which any country-of-origin stereotype enters into the importing country buyers' evaluation process. Recent research has shown that the effect of country stereotype is to shift the position of a product in the perceptual space of buyers, thus altering the evaluation of its merits. See Sage Ann D'Quila Scheer: Effective Marketing Methods in Export Management Companies, p.83.

18

It is then important to include positioning as a marketing method into the study in order to see to what extent it is used by high-technology companies in exporting new products into the foreign markets. 3.4.3. Differentiation Theodore Levitt explained in his article that economic conditions, business strategies, customers' wishes, competitive conditions and much more can determine what sensibly defines the product. One thing is certain in his opinion. There is no such thing as a commodity. Everything in his opinion could be differentiated. It was in the interest of the researcher to see that to what extent differentiation is used by hightechnology companies as a marketing method when seeking advantages over the competition. 3.4.4. Marketing planning If the management of the company has not a clear understanding of where it is heading, the company is likely to get in serious trouble. Many researchers have indicated that there is a need for more careful planning and strategy. Chances for success improve when companies practice strategic marketing planning and implementation.54 Thus it is of interest also in this study to see that to what extent marketing planning is used as a marketing method by high-technology companies.

3.4.5. Marketing information systems/Marketing intelligence Good market selection is only possible when the company has an excellent knowledge of its markets. Internal information includes sales records, cost history, profitability reports, etc. External information can be manifold.55 Thus getting the information can be a tiresome exercise, especially when the company is dealing with foreign markets. Marketing information tend to be quantitative in nature. McKenna 54

Sage Ann D'Quila Scheer: Effective Marketing Methods in Export Management Companies, p.85. See also Ashok K. Gupta, David L. Wilemon: Accelerating the Development of Technology-Based New Products, p. 34.

55

William L. Shanklin, John K. Ryans, Jr.: Essentials of Marketing High Technology, p. 280-281.

19 claims that only with constant and creative monitoring of the environment can hightechnology companies position their products effectively. He also emphasises that qualitative marketing information is more important in high-technology companies.56 In the words of McKenna "the company can learn how receptive customers are to change, and what mental obstacles the company must overcome to get people to accept new products and technologies". Clearly marketing information systems and marketing intelligence is an interesting marketing method also from the point of view of the high-technology company. Therefore it is included into this study. 3.4.6. Market research57 In the approach of Regis McKenna, the famous high technology marketing consultant in the United States, marketing should be qualitative, not quantitative. According to him, qualitative analysis is using past to predict the future. But when speaking about high technology products, the fact in most of the cases is, that the future has very little to do with the past. Instead of trying to evaluate carefully for example how the demand for microchips in a special application is going to develop, efforts should be made to evaluate how attitudes and relationships are developing.58 Focus groups are excellent source of qualitative market information. In addition to the numerical information, it is possible to get some kind of sense about customers feelings and perceptions, and perhaps also new ideas for the product development. It is important, however, that key decision makers get the information from the customers directly.59 It is also important to remember, especially in the case of high56

Regis McKenna: The Regis Touch, p. 108.

57

Deborah Dougherty remarks in her study that the greater the depth and breath of knowledge about the market developed before introduction, the greater is the likelihood of new product commercial success in large firms, regardless of newness of the technology or market. This is not to suggest that new markets can be fully known, since they are inherently ambiguous. See Deborah Dougherty: Understanding New Markets for New Products, p.75.

58

Regis McKenna: The Regis Touch, p. 28.

59

See for example Willard I. Zangwill: Lightning Strategies for Innovation, p.173.

20 technology products, that the success of new products depends a great deal on the decisions of a number of other key stakeholders such as distributors and media.60 Market research is an important marketing method also in the high-technology industry. It is interesting to know, however, how it is used by them. Thus market research is also included into this research.

3.5. Marketing costs As also indicated by Sage Ann D'Quila Scheer61, the researcher was not able to find any published information on export marketing costs in high-technology companies. It is the view of the researcher, that the amount of money devoted to marketing activities is too limited. It is therefore interesting to see how the companies view this issue. Thus marketing costs are added into this study. The marketing costs are asked as percentage of the turnover of the company.

60

Jerry Wind, Vijay Mahajan: Marketing Hype: A New Perspective for New Product Research and Introduction, p. 43. See also Bruce D. Buskirk, Allan C. Reddy, Edward T. Popper: Planning Market Development in High-tech Firms, p.6.

61

Sage Ann D'Quila Scheer: Effective Marketing Methods in Export Management Companies, p.89.